Do you really understand the interest rates of life insurance products?


Interest rates are a factor that a lot of people are interested in when participating life insurance. But many people still don’t get it right and enough about life insurance rates to make the best decision to participate?

Understand the life insurance interest rate factor so as not to compare with the form of savings

A lot of people mistakenly think that life insurance is like a bank savings channel, so they are quite interested in the interest rate received when participating. Life insurance is actually a way of transferring the participants’ financial risks to the insurance company. Simply put, when participants unfortunately encounter health, physical and life-related risks, they are financially supported by the insurance company in a timely manner to minimize their losses. So, in life insurance products the protection factor is put first, the saving factor for profitability is only a small part. This trait is completely different from the way bank savings are deposited for interest. You use your savings to deposit your bank with the primary desire to enjoy high interest rates and preserved funds so immediate protection is not available.

In summary of life insurance and send thrifty They are two forms of different uses, so it is unreasonable to compare interest rates between these two. What matters is what form meets your future savings needs.

What is the interest rate of life insurance products today?

In addition to the guaranteed protection factor, insurance participants are still entitled to unsecured benefits of accumulation and divided interest. However, each insurance product line has a different interest rate mechanism.

Traditional insurance product lines are involved in profit sharing: In addition to guaranteed benefits such as maturity benefits, death benefits, injury benefits in whole or permanently … Participants also enjoy additional benefits from the business results of the insurance company, which is the accumulated insurance and interest divided at the end of the contract. These are two benefits within the terms of the contract and under current regulations, participants are entitled to at least 70% of the total interest earned from the contract.

Investment link insurance product line: Although both general affiliate insurance products and unit-linked insurance have a part of premiums and insurance benefits separated into two separate parts: insurance and investment section, the mechanism of dividing interest is completely different.

With the insurance product associated with the general protection factor is the main factor, so in terms of investment benefits, the buyer is entitled to the benefits from the actual investment results of the jointly linked fund with the investment rate not lower than the minimum specified in the insurance contract. For example, the insurance company will commit to pay the investment interest rate for the duration of the contract and not less than 5% in the first 4 years, 3% from the 5th to the 10th year of the contract and 2% for the remaining contract years.

With insurance products linking the investment factor unit is the main should buy insurance to have the option to invest premiums in unit-linked funds established by insurance enterprises, enjoy the full investment results and bear all investment risks from selected unit-linked funds corresponding to the premiums invested. The higher the risk level of investment funds, the higher the return. For example, if the company does not achieve investment efficiency, customers may enjoy low or un-profitable interest, whereas when the fund invests high interest, customers can receive a high interest rate of 8%, 9%.

the interest rates of life insurance products 1

Insurance companies invest mainly in government bonds, corporate bonds, stocks, deposits, capital contributions, real estate …

The life insurance interest rate is not the purpose of life insurance as it is a financial provision channel against risks and accumulation for the future. Before participating in life insurance, customers need to understand their purpose to choose the right product and be assured of the benefits covered in the future. Do you really understand the interest rates of life insurance products?